How do I make and apply a Normal Map?
Ray distance

You should increase your baking ray distance in order to capture the whole highpoly surface. Here's a comparison between different values (0 on the left, 0.1 on the right),



As said in the manual's page, the parameter controls


  [...] how far a point on another object can be away from the point on the active object. Only needed for Selected to Active.


Low margin settings helps us to see how some parts are missing in the image on the left. Once naked correctly dont' forget to set "non color data" and to connect to the vector socket in the shader.



Notice how the wrinkles and other detais are correctly transferred upon the low-poly mesh.